Socure, the leading provider of artificial intelligence for digital identity verification, sanctions screening, and fraud prevention, has reached a groundbreaking milestone with its First-Party Fraud Consortium. This trailblazing initiative is the first to unite companies across industries to address the growing challenge of First-Party Fraud by sharing data and insights to preempt fraudulent activities.
The consortium boasts unmatched data intelligence, including 190 million contributed identities—121 million of which are unique—325 million accounts, and 20 billion transactions. This marks a historic collaboration across financial services, payments, and other sectors.
Understanding First-Party Fraud
First-Party Fraud, also known as “friendly fraud,” occurs when individuals exploit their own identity for dishonest financial gain. Examples include disputing legitimate ATM withdrawals or credit card transactions to avoid payment. According to Socure’s research, this type of fraud costs the U.S. over $100 billion annually.
The consortium allows members to share dispute histories, payment denials, and account closure data to identify patterns of fraudulent behavior. This real-time data sharing equips businesses to combat fraud efficiently and proactively.
A First-of-Its-Kind Industry Collaboration
The consortium’s founding members include five of the top 10 U.S. financial institutions and fintech leaders like Dave.com, SoFi, Green Dot, and Varo. For the first time, major players from financial institutions, fintech platforms, payment providers, sports betting companies, and merchants are working together to address a shared problem.
“First-Party Fraud has grown into a $100 billion crisis that traditional methods can’t solve,” said Ori Snir, Head of Product Management, Fraud & Identity Solutions at Socure. “This consortium leverages unparalleled collaboration, enabling us to detect and prevent fraud across platforms like never before.”
The Growing Threat of First-Party Fraud
The urgency is clear as fraud cases surge. Mastercard reported 238 million global chargeback cases in 2023, with projections estimating a 42% rise to 337 million cases by 2026. Similarly, card-not-present transaction fraud losses are expected to increase by 40%, reaching $28.1 billion within the same timeframe.
“As a founding member, Green Dot values the importance of collaboration in combating sophisticated fraud schemes,” said Amanda Goettelman, Head of Transformation at Green Dot. “The consortium’s ability to identify fraud risks across institutions gives us unparalleled insights to protect our customers and business.”
Key Insights and Benefits
Early data from the consortium shows that 77% of its members’ customers have overlapping accounts at two or more institutions in the shared database. This underscores the need for cross-industry collaboration.
Powered by these insights, Socure’s Sigma First-Party Fraud solution helps organizations:
- Deliver real-time alerts to counteract Regulation E’s ten-day investigation period.
- Detect fraudulent disputes before they cause financial losses.
- Identify default risks tied to fraud-driven activities.
- Analyze alternative data not tracked in traditional credit reports.
Broader Impact Across Industries
The consortium benefits industries such as financial institutions, merchants, Buy-Now-Pay-Later (BNPL) providers, gaming and sports betting platforms, telcos, and payment processors. By enhancing visibility into transaction behaviors, it enables members to detect fraud risks at account creation, during transactions, and throughout dispute resolution processes.
Socure’s First-Party Fraud Consortium stands as a transformative step in safeguarding businesses and consumers against a rapidly escalating fraud epidemic.
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